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Reinsurance is a means by which an insurance company can protect itself against the risk of losses with other insurance companies. Individuals andcorporations obtain insurance policies to provide protection for various risks(hurricanes, earthquakes, lawsuits, collisions, sickness and death, etc.).Reinsurers, in turn, provide insurance to insurance companies. It is a financialmanagement tool. It is always behind the high quality insurance program or acomplex commercial risk of any good insurer. Reinsurance industries aremaintaining upward surge all round growth, both in the domestic and globalfronts in the last few years. The untapped, both in life and non ± life insurance, particularly in growing economies like India and china, is the center of attractionto leading players in insurance and reinsurance, thanks to globalizations andliberalizations of financial services particularly in last decades. It is a tool of risk management, mutually support and supplement each other in providing risk mitigation to the individuals and organizations at micro level and to the country.Reinsurance is instrument of risk transfer and risk financing. Reinsurance can bedescribed as contract made between an insurance company (insurer) and a third party (reinsurer) where in the later will protect the former by paying lossessustained by it under the original contract of insurance, unlike primary insurance,the reinsurance mainly deals with catastrophic risk which are not only highlyunpredictable but have the potential capacity to cause huge devastation therebythreatening the solvency of the insurance company.